By Phil Franz-Warkentin, Commodity News Service Canada
Winnipeg, Dec. 18 (CNS Canada) – ICE Futures Canada canola contracts were lower on Monday, testing chart support as losses in Chicago Board of Trade soybeans spilled over to take prices to their lowest levels since early September.
Chart-based speculative selling was a feature, as canola remained stuck in a technical downtrend.
A slowdown in demand from grain companies contributed to the softer tone, with end users thought to be well covered for the time being, according to traders.
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However, crush margins improved on the day, which provided some underlying support.
About 36,009 canola contracts traded on Monday, which compares with Friday when 40,111 contracts changed hands. Spreading was a feature, accounting for 25,556 of the contracts traded as participants exit the front month and square positions ahead of the New Year.
Soybean futures at the Chicago Board of Trade were weaker on Monday, as good rains in Argentina over the weekend helped ease some of the dryness concerns in the country.
However, about twenty percent of the soybean growing regions in Argentina are still thought to be on the dry side, and more moisture will be needed.
Speculative selling contributed to the losses in soybeans, with the January contract falling to fresh three–month lows.
Chicago corn futures held near unchanged, lacking any clear direction as the market continues to look for fresh news.
While the rain in Argentina was also bearish for corn, speculators are already holding large net short positions in corn and ideas that the market was looking oversold provided support.
U.S. wheat futures were stronger, as U.S. exports are finally looking more competitive on the global export market.
Mounting dryness concerns in the southern US Plains were also supportive, as the lack of moisture will leave winter wheat more susceptible to frost damage when temperatures turn colder.
However, the large world wheat supply situation remained a bearish influence in the background.
